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100% business rates retention legislation dropped

The Local Government Finance Bill has been dropped from the legislative programme, leaving plans for business rates retention in limbo and some councils disappointed.

Chief executive of the Chartered Institute of Public Finance and Accountancy, Rob Whiteman, said he was ‘disappointed but not surprised’ that the legislation had been dropped.

He said: ‘I’m not surprised that there aren’t specific finance measures. I think the sector expected very little in the Queen’s Speech.’

Despite the lack of a Local Government Finance Bill, a Department for Communities and Local Government spokeswoman said: 'The Government is committed to delivering the manifesto pledge to help local authorities control more of the money they raise and will work closely with local government to agree the best way to achieve this.'

Finance experts have suggested that both 100% retention and the promised fair funding review could still go ahead without legislation.

However, powers to mandate pooling and allowing combined authority mayors to impose infrastructure levies will need a change in the law.

Ministers are understood to remain determined to address concerns about the fairness of current funding distributions and a thorough, evidence-based review is expected, but this will be politically tricky.

One finance expert said: 'It is a zero-sum redistribution between councils, with losers liable to bleat loudly and winners feeling they still don't get enough.

'I'd be surprised if this goes smoothly unless they can find some new money to ensure no one loses in cash terms or damp the whole thing away.'

The Department for Communities and Local Government is believed to be in the process of working out what aspects of its financial reform programme could go ahead without legislation.

Essex CC leader Cllr David Finch said: 'We are very concerned that the critical issue of how local government is funded in the future has not been addressed. We want to know what the Government intends to do.

'We have long campaigned for business rates reform and will continue to lobby for all rates to be devolved to local councils as a way of funding services and driving economic growth.'

One senior local government finance officer said: 'No comment, just a big sigh of disappointment.'